May 10 (Bloomberg) -- LivePerson Inc.’s biggest one-day
tumble in almost 12 years makes the developer of website
tracking software an acquisition target, according to Benchmark
Co. and Oppenheimer & Co.

The 36 percent plunge in LivePerson shares in New York
yesterday reduced the company’s market capitalization to $454
million, the lowest level since October 2010.

LivePerson, which makes software that allows businesses to
track people on their websites, extended the past year’s 48
percent slump after lowering its full-year revenue forecast by
as much as 3.8 percent on the loss of a customer. Companies such
as International Business Machines Corp., the world’s biggest
computer-services provider, and Oracle Inc. may look to purchase
the developer, Oppenheimer analyst Brian Schwartz said.

“These acquirers will be most interested in LivePerson’s
technology, which is highly sophisticated and difficult to
replicate,” Schwartz, who cut LivePerson to the equivalent of
hold May 8, said by phone from San Francisco yesterday. “The
selloff in the stock would give these companies the ability to
acquire LivePerson more accretively than previously.”

Yesterday’s tumble reduced LivePerson’s valuation in New
York to 25 times estimated earnings, the cheapest level since
October 2011, data compiled by Bloomberg show. At least four of
the 15 analysts covering the New York-based company that has
operations in Tel Aviv downgraded the stock, according to data
compiled by Bloomberg.

RightNow, DemandTec

Oracle, based in Redwood City, California, purchased
RightNow Technologies Inc. for $1.5 billion in October 2011 to
gain customer-service expertise. Armonk, New York-based IBM
bought DemandTec Inc. in December 2011 to add Internet-based
tools to help businesses adjust promotions based on buying
patterns.

“If you look at the companies that LivePerson competes
with, there are only two public companies left. The other ones
have been bought,” Jon Hickman, an analyst at Ladenburg
Thalmann & Co. in New York, who has a buy rating on the shares,
said by phone yesterday. “LivePerson might have the same fate,
and get taken out by a big software company.”

Net Loss

Lori Bosio, IBM’s software group media director, said by
phone in New York yesterday that the company doesn’t comment on
deal speculation. At Oracle, Jessica Moore in corporate
communications said that the software marker declined to comment
in an e-mail yesterday. Erin Kang, a media official for
LivePerson in New York, said by e-mail that no one from the
company was available.

LivePerson’s 50-day volatility quadrupled yesterday to a
four-year high of 106 from a record low of 24.2 May 8.

The company reported a net loss in the first quarter of
$232,000, its first unprofitable three months since the quarter
ended December 2008, data compiled by Bloomberg show.

LivePerson’s sales of $42.5 million, which rose 16 percent
from a year ago, missed analysts’ estimates by 0.1 percent.
Chief Financial Officer Daniel Murphy said that a major
customer’s cancellation and continued economic weakness in
Europe spurred the company to lower its full-year outlook.

M&A Perspective

Shares of LivePerson in Tel Aviv sank 23 percent to 35.07
shekels yesterday, or $9.87, the lowest level since the company
started trading in Israel. That’s still a record premium to the
U.S. stock, which declined to $8.12.

“This one hits them pretty hard, but I don’t understand
shares being down so far,” Mark Schappel, a analyst at
Benchmark in New York who rates LivePerson hold, said by phone
yesterday. “I thought there’d be more support from an M&A
perspective.”

The Bloomberg Israel-US Equity Index of the biggest Israeli
stocks in the U.S. added 0.7 percent to 91.99 yesterday, the
highest level in more than a year. Israel’s benchmark TA-25
Index declined 0.5 percent to 1,203.19.